Fin 431 - Sample First Exam (2006) - Key

Fin 431 - Sample First Exam (2006) - Key - discount to...

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Fin 431 Sample First Exam (2006) Key One point questions: 1. F 2. F 3. T 4. T 5. F 6. C + D 7. C 8. B 9. C 10. A Two point questions: 11. Policyholder $500 CUMIS $25,000 Quota Share Reinsurer $90,000 Per-risk Excess Reinsurer $5,000 12. Photograph the contents of their house and store the photos somewhere away from the home. 13. (63-68)/68= -7.4% 14. $254.36 15. Independent agents represent two or more companies; exclusive agents, one company or group of companies. 16. There are many possible answers to this, as we are looking for good, practical suggestions. You would not get full credit if you say raise rates of people with cell phones, since almost everyone has a cell phone, but everyone does not use them while driving. It would also not be practical ask people if they use cell phones while driving and then charge them more, since no one would admit to that. The company could inform policyholders that using a cell phone while driving is dangerous, and to give a
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Unformatted text preview: discount to anyone who agrees never to use their cell phones while driving (this would in essence be a surcharge to everyone else). Then, if someone is in an accident while driving, the insurer would not pay for the damage to their car (the company could not get out of paying any damages to anyone else, since that would violate public policy). Other useful suggestions would be accepted as well. 17. 99.3% 18. 79.8% 19. Link Factors Accident Year 12-24 24-36 36-48 2002 1.50 1.10 1.01 2003 1.40 1.14 2004 1.475 Average 1.458 1.12 1.01 Age-Ultimate 1.650 1.131 1.01 20. Accident Year Paid to Date Age to Ultimate Ultimate Losses Loss Reserve 2002 1000 1.000 1000 2003 1117 1.010 1128 11 2004 1180 1.131 1335 155 2005 900 1.650 1485 585 Total 4197-4948 751...
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This note was uploaded on 09/27/2008 for the course FIN 431 taught by Professor D'arcy during the Spring '06 term at University of Illinois at Urbana–Champaign.

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Fin 431 - Sample First Exam (2006) - Key - discount to...

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